Footsy Situation

merlingrey

You get out when you see bond yield curve flat, that's the best indicator.

Reason? banks have been buying up 6 month, 1 year ,2 year 5yr and 7yr bonds but not the 10-30 year ones (QE) keeping the market afloat.

If the yield curve goes flat get the hell out.

Right now it looks like this across the board:

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/


Obviously you'd need further confirmation and to look at news if/when the time comes along but do watch out for it as a danger sign.

I don't trust all this manipulation of markets through bond purchase to hold up for good.

IronWolf

Radiantsoul wrote: »

It creates liquidity though and that liquidity reduces the price of capital. The P/E ratio for unquoted companies is far lower than quoted ones.

It also benefits investors because the bid/ask spreads are drastically reduced.

I don't really have a problem with automated trading, it just creates more opportunities for human investors to take advantage when computers call it wrong.

Jegersmart

IronWolf wrote: »

It also benefits investors because the bid/ask spreads are drastically reduced.

I don't really have a problem with automated trading, it just creates more opportunities for human investors to take advantage when computers call it wrong.

well, that is what we are told. I don't have a problem with automated trading per se, but if there are enough that use similar algos it could certainly get hairy at times.

I am not really sure how we got on to blackboxes tbh.

J

Glen_Clark

Regarding bowlheads reference to post thanks - most seem to be given in the '
Quick! Grabbit while you can (721 Viewing)
For reporting hot bargains, not requesting them
section of the forum. People posting a discount code on there, copied from another forum, get literally hundreds of thanks for one post.

Glen_Clark

IronWolf wrote: »

The current levels of the stock market are far from ridiculous given the low risk free rates.

Exactly. As far as I can see, the reason share prices have risen is simply low interest rates. Company profits are not that high, and in any case those profits are being sustained by low interest rates - companies paying less to borrow.
So the big question is when will interest rates rise?

melbury

Exactly, when will interest rates go up? I am fed up with going into one year fixed rate accounts because I keep thinking they will go up. Now I know I should have chosen a 5 year fixed rate a few years ago:mad: That hindsight again.

grey_gym_sock

yes, a certain amount of speculative trading is useful, because it creates liquidity.

but beyond a certain level, additional speculative trading adds no significant further value; and may even have negative effects, such as increasing volatility.

high-frequency trading programs - where we're talking about fractions of a second - add no overall value to the market. if they make money, it can only be because somebody else loses it. it would be better if they didn't exist. it might be nice to think that these programs are just as likely to mess it up and lose money, but i very much doubt it.

grey_gym_sock

Glen_Clark wrote: »

as for Cameron & Osbornes broken promises to savers I don't know where to start..... http://www.saveoursavers.co.uk/featured/we-know-what-they-did-but-what-did-they-promise-to-do/

perhaps i expect too little from politicians, but i didn't spot any broken promises to implement specific policies in there.

there are plenty of statements which are so vague that they're meaningless - e.g. "And we have to make it crystal clear to young savers that it pays to save."

there is plenty of sniping at what labour was doing in government.

there are even policies which they asked the labour government to implement - i.e. abolishing basic rate tax on savings - but never actually promised to do themselves.

i try to blank out all the "we are on your side" guff from politicians, and just look at specific policy pledges - while still expecting some of those to be broken. the present government has broken a few, but i'm not sure they have in the area of savings.

Jegersmart

grey_gym_sock wrote: »

yes, a certain amount of speculative trading is useful, because it creates liquidity.

but beyond a certain level, additional speculative trading adds no significant further value; and may even have negative effects, such as increasing volatility.

high-frequency trading programs - where we're talking about fractions of a second - add no overall value to the market. if they make money, it can only be because somebody else loses it. it would be better if they didn't exist. it might be nice to think that these programs are just as likely to mess it up and lose money, but i very much doubt it.

Everytime someone wins, someone else loses. Fewer participants, less chance of you losing money? Is that how you see it?

J

grey_gym_sock

Jegersmart wrote: »

Everytime someone wins, someone else loses.

there are 2 ways to make money: wealth transfer, and wealth creation. stock markets are a bit of both (as are most areas).

providing finance to businesses can be a part of wealth creation.

high-frequency trading is (IMHO) a case of pure wealth transfer.

Fewer participants, less chance of you losing money? Is that how you see it?

yes, to an extent. i expect high-frequency traders are making money overall, and what they are doing is wealth transfer, therefore other market participants are losing.

personally, my holding times for investments are on average very high, so the effect on me is likely to be minimal. it's short-term traders who might lose more.